Changes to Superannuation

Budget 2017 - What Are The Changes To Super?

With a raft of changes announced in last year's Budget coming into effect on 1 July, the Government has made few but significant changes this year.

  • One big change announced after much speculation, is there will be assistance given to first home buyers.

The Government has announced the introduction of the First Home Super Savers Scheme from 1 July 2017 where savers can contribute from their before-tax income into their super fund and be taxed at the 15% super tax rate.

First home buyers can contribute up to $15,000 pa to this scheme to a total of $30,000 per person.

NB The overall cap of $25,000 still remains for voluntary contributions to your super So if you have contributed $15,000 into your super for a home deposit, you will only be allowed to contribute $10,000 for your long term super during that year.

When this money is withdrawn as a deposit for a first home it will be taxed at the marginal rate with a 30% offset. Note, only contributions identified as part of the scheme, and the deemed earnings on these contributions can be withdrawn.
Withdrawals will be allowed from 1 July 2018.

  • From 1 July 2018, older Australians will be encouraged to downsize to increase the supply of homes for first home buyers. Australians 65 or over will be able to make an after-tax contribution of up to $300,000 from their home sale. Both partners in a relationship can do this meaning combined a couple can contribute up to $600,000 to their super.

  • Conditions are that the couple must have held their home for at least 10 years and that it is the primary place of residence. This will be classified as an additional super contribution and will not be subject to caps.

Other Changes That Will Affect Pensioners Include:

  • Residence requirements for the Age Pension and Disability Support Pension are increasing to 10 years continuous residence, including five of a person’s working life, affecting about 2400 people.
  • Pension concession cards will be reinstated to former recipients who lost the entitlement after changes to the assets test measure commenced this year.
  • Aged pensioners and disability support pensioners will get a one-off payment to help with energy bills this winter. Singles will get $75 and couples $125.

New Financial Complaints Authority.

From 1 July 2018 the Superannuation Complaints Tribunal (SCT) will be replaced with the new Australian Financial Complaints Authority (AFCA). The AFCA will be an industry funded complaints body covering all financial and superannuation disputes.


*From 1 July 2017, the use of Limited Recourse Borrowing Arrangements (LBRA's) will be included in a member's total super balance and transfer balance cap. The outstanding loan will now be included in a member's total super balance.

Also, the repayment of the principle and interest of a LRBA from a member's accumulation account will be credited in the member's transfer balance account.

LBRA's had been used to dodge super caps and transfer growth in assets from the accumulation to pension phase without being captured by the transfer balance cap of $1.6m. In effect this will make some SMSF members think twice about taking on a LRBA to invest in property, as this may trigger the $1.6 million transfer balance cap in retirement.


Budget May 2016 - Significant Changes To Super from 1 July 2017.

Concessional Contributions Cap to be Reduced to $25,000

From 1 July 2017, the concessional (before-tax) contributions cap will be reduced to $25,000. This applies to both SG and salary sacrifice contributions, which means the total of these two types of contributions count towards this cap. The current cap is $30,000, or $35,000 for people 50 and over.. The current caps are indexed, but from 1 July 2017 this will not be the case.

Another change will allow people with a super balance under $500,000 to make “catch-up” contributions of unused caps over 5 years. So for people with an account balance less than $500,000 who have made no concessional contributions for three years, in the fourth year your annual concessions cap would be $100,000. Unused concessional caps will accrue from 1 July 2017.

Removal of Age Based Contribution Rules.

NB (This proposal has now been scrapped by the government).

Therefore the work test will remain in place and works as follows: if a person aged 65 years or over wishes to make a super contribution, then he/she must work 40 hours in a 30-day period in the financial year in which he/she plans to make the super contribution. The government also intended to allow individuals aged 65 years or over to be able to receive contributions from their spouse under the contributions splitting rules (and presumably under the low-income spouse tax offset rules), which currently they cannot. The government is not going ahead with either proposed change.

From 1 July 2017 people aged between 65 and 74 can continue to make voluntary or after
tax contributions but must meet the works test.

From 1 July 2017, you will also be able to make contributions to a spouse aged under 75 without the need for your spouse to meet a works test

Spouse Contributions-Changes 1 July 2017

From 1 July 2017, the Government will extend the eligibility rules for claiming the tax offset for super contributions made to low income spouses.

IThe current 18% tax offset of $540 will be available for anyone married or de facto, contributing to a spouse whose income is up to $37,000.. The offset is reduced for income above this level and phased out at income above $40,000.

*No tax off set is available when the spouse receiving the contribution has exceeded their after-tax cap or their super balance is $1.6m or higher.
*There are no changes to the age based contribution rules. The spouse receiving the contribution must beunder age 70, and meet a work test if aged 65-69 years.

Low Income Earners

The Government will introduce a Low Income Superannuation Tax Offset (LISTO) from 1 July 2017 which will replace the Low Income Superannuation Contribution (LISC). Those earning $37,000 or less who make a concessional (pre-tax) contribution to their super will receive a tax benefit capped at $500 to offset the contributions tax paid.

The LISTO will, in particular, assist around 2 million low income women build their super savings.said the Treasurer.

The ATO will assess whether you are eligible for the LISTO based on your tax adjustable income, and will let your super fund know whether you will receive the payment each year.

Lifetime Cap for After-tax Contributions - $500,000.

(This has now been Scrapped)

Replaced with $100,000 pa after - tax cap (reduced from $180,000 pa.)

The government had proposed introducing a $500,000 lifetime cap for non-concessional (after-tax) superannuation contributions. This is a big change from the current limit of $180,000 a year (or $540,000 every three years for individuals aged under 65).

A controversial element of this lifetime cap is that the cap would have been retrospective and include all after-tax contributions made on or after 1 July 2007. It was proposed to measure an individual’s non-concessional contributions from this date.


After much uproar over the $500,000 lifetime cap, the government has replaced this with a $100,000 after-tax contributions cap taking effect from 1 July 2017.

"The new rules allow up to $300,000 in after-tax contributions over 3 years if under the age of 65 years.

*After-tax contributions can only be made if you have a total superannuation balance less than $1.6m.

Excess contributions made after commencement will need to be removed or be subject to penalty tax.

High Income Earners

Currently individuals earning $300,000 pa and above pay 30% contributions tax on concessional (before-tax) contributions to super. From 1 July 2017, this threshold will be reduced to those earning $250,000 or higher.

Superannuation Transfer Balance Cap

From 1 July 2017, the government will introduce a $1.6 million limit on the amount an individual can transfer from superannuation funds into a tax-free retirement account. Superannuation funds accumulated above the cap can remain in an accumulation account, where the earnings will generally be taxed at 15%.

The new measure will apply directly to those who enter the retirement phase after Budget night (3 May 2016) and for those who are already in the retirement phase, they will have until 1 July 2017 to reduce the amount in tax-free retirement accounts to $1.6 million.

If your retirement account is above $1.6 million at 1 July 2017, you will need to either:

*transfer the excess into a superannuation account, or

*withdraw the excess amount from your retirement account.

Transition to Retirement Changes.

From 1 July 2017 the government will remove the tax exempt status of earnings that support the transition to retirement income stream (TRIS). From 1 July 2017, earnings on the assets supporting the TRIS will be taxed at 15%.

The government will also remove a rule that allows individuals to treat certain superannuation income stream payments as lump sums for tax purposes.

Stopping Anti-Detriment Payments

From 1 July 2017, super funds will no longer be able to make anti-detriment payments. An anti-detriment payment is essentially the refund of contributions tax paid on a member’s death, that increases the death benefit paid to an eligible beneficiary (spouse, former spouse, child).

Increased access to tax-deductible contributions.

For those who have continued to work long past retirement age, tax-deductible contributions will be available to individuals under the age of 75, including those who are self-employed or employed and don't meet the 10 per cent income test. The work test still applies for those over 65 years of age.

Budget 2015 - Few Changes to Super

Treasurer Joe Hockey has reassured all Australian's that they can have confidence in their retirement plans. In his budget speech, Mr Hockey has confirmed that " there will be no new taxes on superannuation under this government."

Superannuation Announcements:

Lost and Unclaimed Super - From 1 July 2016

The Government will implement measures which will cut red tape for both funds and individuals. These measures will make it easier for individuals to be reunited with their lost and unclaimed super.

Changes to Early Release of Super on Medical Grounds

**The Government has announced that from 1 July 2015, a person will qualify for early release of their benefits on medical grounds if they obtain medical certification stating they have less than 24 months to live, (currently 12 months).

Changes to the Social Security Assets Test to determine Pension eligibility from 1 January 2017

**The Government has announced future changes to the assets test which aim to improve the targeting of pension payments to those most in need by providing additional assistance for those with moderate asset holdings, while reducing assistance to those with more significant asset holdings.

What will change?

The "asset free" area will increase. This means the value of assets a person can hold (not including the family home) in order to access the FULL pension will rise. From 1 July 2017. The assets free area will increase from $202,000 to $250,000 for SINGLE homeowners and from $286,500 to $375,000 for COUPLES who own a home.

Pensioners who DO NOT own their own home will be able to hold $200,000 more in assets than those who do.


The Government will REDUCE the maximum amount of assets (excluding the family home) that a person can hold to qualify for a part-pension.

COUPLES who have more than $823,000 in assets (excluding the family home) can no longer claim the part-pension - down from a $1.15 million threshold.

SINGLE homeowners who have $547,000 in assets (down from $775,000) will also lose their part-pension.

Taper Rates to increase from $1.50 to $3.00

This change means that for every $1,000 in assets held ABOVE the LOWER threshold, fortnightly payments will be reduced by $3.00. The increase in the taper rate will significantly reduce the number of Australians who can access the part-pension.

Commonwealth Seniors Health Card (CSHC)

Those pensioners who have been affected by the scaling back of the maximum asset threshold, (from$1.15m to $823,000) will still be guaranteed eligibility to the CSHC.

Pension Indexation

The Government has abandoned it's decision to link pension increases from 1 July 2017 to the Consumer Price Index (CPI).

This means that pensions and related payments will continue to be indexed to the higher of increases in the CPI, or The Pensioner and Beneficiary Living Cost Index, and benchmarked to Male Total Average Weekly Earnings.

The Government’s reforms to Superannuation:

Stronger Super

These reforms aim to make our superannuation system stronger and more efficient, helping to maximise the retirement income of all Australians.

What are the reforms?

• MySuper

    • A new type of super account – From 1 July 2013 super funds will offer a simple, low-cost default superannuation product called MySuper.
    • MySuper will replace existing default funds offered by super funds.
    • The MySuper product will have lower fees and simple features so you don’t pay for services you don’t need.
    • From 1 January 2014, if you haven’t chosen your own super fund, your employer must pay your super to a fund that offers MySuper.
    • If you have already chosen a fund, you can elect to move to a MySuper product.

Savvy Tip!

You should contact your fund to see if their MySuper product is right for you.

• SuperStream Package

    • These measures will make the processing of transactions faster, cheaper and easier. So your requests will be processed in a more efficient manner.

• Self Managed Superannuation Funds (SMSF’s)

    • From 1 July 2013, auditors must be registered with ASIC to sign off on annually required SMSF audits. ASIC’s public register of SMSF auditors will make it easier for SMSF Trustees to find an approved auditor.

• Future of Financial Advice (FOFA)

    • From 1 July 2013, all advisers will have to act in their clients’ best interests when providing advice and no adviser can put their own interests ahead of their clients'.

What are the benefits of the FOFA reforms?

  • Adviser interests will become aligned with client interests, leading to more client-focused advice and greater adviser engagement with clients;
  • Product recommendations will not be influenced by commissions paid to advisers by product issuers;
  • A more competitive advice market;
  • Greater availability of advice;
  • Advisers will be discouraged from recommending irresponsible investment strategies, for example, strategies that rely heavily on borrowed funds;
  • A reduction in product fees which will result in significant savings for consumers; and
  • Advisers that are better qualified and focused on their client’s needs.

Consumers are the primary focus of the reforms and the Government believes that consumers will greatly benefit from a structural change in the financial advice industry, that will outweigh the implementation costs to deliver.

Overall, the quality of financial advice will improve, leaving Australians in a better position to make

decisions about their financial future.

Changes to superannuation and pension products

Once again the Government has reviewed several points of superannuation legislation.

Below is a summary of recent changes announced on 5 April 2013.

Increased concessional contribution caps

From 1 July 2014, the concessional cap for over 60’s will increase from to $35,000. This cap has not been limited to balances below $500,000 as initially proposed. The cap for other age groups will increase to $30,000 from $25,000. The same unindexed cap of $35,000 will apply to those 50 years and over from 1 July 2014.

Earnings tax on superannuation income greater than $100,000

  • From 1 July 2014, earnings on pension assets will be tax-free up to $100,000 a year for each individual. Pension earnings above $100,000 will be taxed at 15%, which is the same concessional rate applicable to fund earnings in the accumulation phase (that is, the long period before you start a superannuation pension).


The Abbott Government announced on 7/11/2013 that they will axe the proposed tax on pension earnings over $100,000.
This extra tax would have affected roughly 16,000 Australians.

  • The current tax rules that apply to earnings on pension assets are:
    • All fund earnings derived from super fund assets that support a super pension are tax-free.
    • The super changes impose a new tax of 15% on pension earnings above $100,000 a year.

Savvy Tip!

Pension earnings are not the same as pension payments to the fund member, which remain tax-free at all levels.


The $100,000 pension earnings threshold is going to be indexed to the Consumer Price Index (CPI) and will increase in $10,000 increments.

What about CGT on pension assets that are currently tax exempt?

Special arrangements do apply for capital gains on assets purchased before 1 July 2014.

  • For assets purchased before 5 April 2013, the new pension earnings tax will only apply to gains accrued after 1 July 2024. This 10 year window gives retirees the opportunity to sell their superannuation assets to avoid paying CGT.
  • For assets purchased after 5 April 2013 to 30 June 2014, individuals can choose to apply the reform to the entire capital gain, or only the part that accrues after 1 July 2014.
  • All assets purchased after 1 July 2014 will have the new pension earnings tax applied to the capital gain in full.

Inactive accounts threshold to increase.

Currently inactive super accounts with balances less than $2,000 are transferred to the ATO. From December 2015 this balance will increase to $2,500 and from 2016 this will increase to $3,000.

Excess contributions tax – new rules from 1 July 2013.

The excess contributions tax has savaged retirement savings for conscientious retirees. After intense lobbying by the superannuation industry and an investigation by the ATO, the government has shown some compassion for retirees and altered the harsh tax regime on excess before-tax contributions.

The government has announced changes to the treatment of future excess (before-tax) contributions. The government will allow individuals to withdraw any excess concessional contributions made from 1 July 2013 from their super fund. These excess concessional contributions will now be taxed at the individual’s marginal tax rate plus an interest charge (which applies to all income tax that is paid late to the ATO), rather than being taxed at the top marginal tax rate.

Savvy Tip!

The tax treatment of excess non-concessional (after – tax) contributions has also changed and Australians can choose to withdraw any contributions above the cap. If not withdrawn a tax of 46.5% will be paid on these excess super contributions.

The rules remain very harsh for excess contributions made before 1 July 2013. If you do exceed the concessional cap before 1 July 2013 (or any previous year) the excess contributions will attract a penalty tax of 31.5% which is added to the 15% tax paid on the contribution.

The excess concessional contributions will also count towards your non-concessional or after-tax cap.

BUDGET 2014/2015

The government has proposed substantial changes to superannuation and particularly access to the Pension.